The real risk of AI for SMEs: Losing the human connection

Every wave of technology has sparked the same question: Will technology replace us?

- Andrew Lim

In the 1980s, it was spreadsheets. In the 2000s, it was automation. Today, it is artificial intelligence (AI).

Yet, the lesson remains unchanged: technology changes how we work — often for the better — but trust, empathy and judgment continue to be the driving forces behind strong and lasting business relationships.

Understanding the importance of balancing technology with human connection will be key for small and medium-sized enterprises (SMEs) to drive economic growth in Singapore and Asean.

SMEs are the backbone of the economy. In Singapore alone, they make up 99 per cent of all enterprises, employ about 70 per cent of the workforce, and contribute nearly half of the nation’s gross domestic product (GDP), according to Singapore Department of Statistics in 2024.

Across Asean, micro, small and medium enterprises provide 85 per cent of jobs and nearly 45 per cent of GDP, according to the Asean Secretariat. For these businesses, the drive to boost operational efficiencies through AI is real, but so is the danger of losing the human connections that underpin customer loyalty, employee engagement and long-term resilience.

There is no question that AI holds immense potential for SMEs. It can reduce costs, streamline operations, and open new opportunities for growth. From automated chatbots to predictive analytics, digitalisation is no longer optional — it is a necessity. Singapore’s SMEs have made impressive progress. The Infocomm Media Development Authority reported that more than 94 per cent adopted at least one digital solution, such as e-payments or cloud services, in 2023.